Will Louis DeNaples' past haunt casino's future?

What a reputed mobster said to state gaming investigators could affect whether Mount Airy owner gets license renewed.

November 23, 2009|By Matt Birkbeck OF THE MORNING CALL

Nearly three years after awarding a slots license to Louis DeNaples, state gaming investigators have interviewed the reputed Scranton mobster DeNaples said he didn't know.

And whatever William D'Elia told them could affect whether DeNaples, a wealthy businessman who's the guarantor of million in loans for the Mount Airy Casino Resort, is allowed to keep his gaming license, which is up for renewal in the spring.

A Pennsylvania Gaming Control Board official confirmed the D'Elia interview in a letter to state Rep. Doug Reichley, R-Lehigh, who had asked the board what information it had on any relationship between D'Elia and DeNaples. Cyrus R. Pitre, chief enforcement counsel for the board's Bureau of Investigations and Enforcement, declined Reichley's request for that information.

Pitre wrote Reichley that the D'Elia interview "directly concerns the details of a pending background investigation and the results of the investigation will be presented to the board in the future."

Reichley had sought the information after a federal judge in October unsealed a motion by federal prosecutors requesting a reduction of D'Elia's nine-year prison sentence for his cooperation in several probes, including Dauphin County's interest in DeNaples for alleged perjury.

D'Elia, the alleged head of the Bufalino crime family, pleaded guilty in November 2008 to money laundering and witness tampering.

It's unclear what D'Elia told gaming investigators. D'Elia's attorney, James Swetz of Stroudsburg, said he wasn't there in July when D'Elia was interviewed.

But federal prosecutors said in their motion that D'Elia had previously provided "conclusive evidence of a longstanding relationship with DeNaples including photographs and other documents."

The motion was supported by the gaming board.

Dauphin County prosecutors also agreed with the sentence reduction, saying that D'Elia had told a county grand jury about his longstanding relationship with DeNaples. D'Elia told the grand jury DeNaples attended the funeral of D'Elia's mother in 1980. Prosecutors also had state police surveillance photos of DeNaples attending D'Elia's daughter's wedding in 1999, along with several high-ranking Philadelphia mobsters, according to the federal motion.

Dauphin County subsequently accused DeNaples of lying to the gaming board about his ties to D'Elia, but the charges were withdrawn in March after DeNaples agreed to give up control of Mount Airy to a trust headed by his daughter, Lisa, who is Mount Airy's chief executive officer.

The Gaming Board only can issue a casino license to someone of "good character, honesty, integrity and responsibility," state regulations say.

Louis DeNaples remains the guarantor of about $250 million owed J.P. Morgan Chase and other lenders and, under Pennsylvania law, is required as the guarantor to remain a primary licensee.

Most gaming states have a mechanism in the event a casino owner dies, becomes mentally incapacitated or loses his license, but Pennsylvania does not.

Regulatory requirements elsewhere may include the appointment of a trustee to oversee the casino's operations or outright sale, said Fred Gushin, managing director of Spectrum Gaming Group in New Jersey.

"That's typical for most regulatory systems," Gushin said.

Under Pennsylvania law, it's unclear what would happen if DeNaples' license is not renewed.

"The General Assembly recognized that each casino is a privately run business enterprise and it is not up to them to run the companies or make fundamental business decisions for them," said Doug Harbach, Gaming Board spokesman. "It therefore expects that the burden to be financially suitable be placed on the licensee as a private business, and not on the government."

Harbach declined further comment, citing the "pending investigation."

Since opening Mount Airy two years ago, DeNaples has twice refinanced with his main lender, J.P. Morgan Chase. Moody's Investors, which gave Mount Airy its lowest rating a year ago, no longer rates the debt owed by the casino.

"We withdrew the ratings in January due to inadequate information from Mount Airy," said Keith Foley, a Moody's analyst.

If DeNaples is found unsuitable and his license is revoked, Gushin said Mount Airy could have to come up with another financial source to meet suitability, or consider a possible sale.

"There's always a bidder," said Gushin. "It depends on what price, the financials, the operations, its debt service. There are a lot of issues that go into this."